PARAMOUNT LIMITED Vs. ION EXCHANGE (INDIA) LIMITED

JUDGEMENT

(1.) This appeal filed under Sec. 37 of the Arbitration and Conciliation Act, 1996, challenges the judgment and order passed by the learned Single Judge dtd. 5/6/2006 in the arbitration petition filed by the Respondent- Ion Exchange (India) Limited. By the impugned order, the learned Single Judge had set aside the arbitral award dtd. 31/3/2005 passed in favour of the Appellant-Paramount Limited, the Claimant before the Arbitrator.

(2.) In this judgment, the Appellant- is referred to as "Paramount". Respondent- Ion Exchange (India) Limited is referred to as "Ion Exchange". Briefly, the dispute arose in the following facts. The Gujarat Electricity Board had invited tenders for the Turnkey Project for the Sikka Thermal Power Project Pretreatment Plant. Paramount and Ion Exchange signed a Memorandum of Understanding to bid with the Gujarat Electricity Board (Board) for the design, construction, supply execution, painting, testing and commissioning of the pretreatment plant and connected civil, mechanical, electrical and instrumentation plant work. The Memorandum of Understanding (M.O.U.) was signed at Mumbai. Pursuant to the M.O.U. bid was submitted to the Board. The Board accepted the tender and issued a Letter of Intent on 28/12/1994.

(3.) Disputes arose between the parties. On 26/2/2002, Paramount put forth its claim and called upon Ion Exchange to settle it and make payment. On 28/3/2002, Ion Exchange replied and denied the claim. On 13/4/2002, Paramount wrote to Ion Exchange stating that Ion Exchange was not making payment as called upon as per the letter dtd. 26/2/2002, and differences and disputes had arisen. The M.O.U. contained an arbitration clause stating that if a dispute arises between Paramount and Ion Exchange, each one will make a reference for the arbitration of such dispute as cannot be mutually resolved. It was agreed that both parties would nominate/ appoint one arbitrator each, and two arbitrators would appoint an umpire. It was agreed that if one party fails to appoint an arbitrator after due notice, the arbitrator appointed by the other party will be the sole arbitrator. Such a reference was to be treated as a submission to arbitration under the Indian Arbitration Act of 1940, as amended. The notice dtd. 13/4/2002 stated that the matter is required to be resolved through arbitration and called upon Ion Exchange to send the name of one of the arbitrators. Paramount informed Ion Exchange that it has nominated Mr. Sanat Pandya as the arbitrator. Paramount called upon Ion Exchange to appoint its arbitrator. On 17/5/2002, Paramount informed Ion Exchange that since Ion Exchange did not appoint its arbitrator, the arbitrator appointed by Paramount, Mr. Pandya, would act as a sole arbitrator to resolve the disputes and differences as per the arbitration clause.